Warner Bros. Discovery’s stock is experiencing an impressive surge, trading near its 52-week high of $13.87 after gaining 49% this year. This remarkable performance stems from two key developments. Investment bank KeyBanc has significantly raised its price target from $13 to $18—a nearly 40% increase—predicting second-quarter results will substantially exceed market expectations for revenue and adjusted EBITDA. Particularly noteworthy is the projection that management will upgrade its streaming EBITDA forecast to over $1.4 billion, while the Studios division is expected to reach nearly $2.5 billion in EBITDA by 2025. Additionally, a recent buyback offer should reduce net debt by approximately $3 billion, improving the debt ratio to about 3.5 by late 2025.
Restructuring for Future Growth
The company is undertaking dramatic changes, including cutting 10% of its film division workforce across marketing, sales, and production departments. This reduction aligns with plans to split into two publicly traded entities by mid-2026: "Warner Bros" will house streaming and studios operations, while "Discovery Global" will encompass cable networks like CNN, TNT, and Discovery+. KeyBanc analysts value the streaming and studios segment at 11 times adjusted EBITDA, with networks at 6 times. After disappointing performances from "Joker: Folie A Deux" and "Furiosa," 2025 is showing improvement with successful releases like "A Minecraft Movie" and the new "Superman" film, which generated $217 million globally on its opening weekend.
